How To Buy Stocks: Profit Margins Hold Key To Profitability

Blockhead10-29 20:00

Sales growth is an important gauge when picking stocks. But sales mean very little if they don't produce a profit. If a company has a 25% profit margin, then it nets 25 cents per dollar of sales. Your...

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But sales mean very little if they don't produce a profit.\nIf a company has a 25% profit margin, then it nets 25 cents per dollar of sales. Your...</p>\n\n<a href=\"https://www.investors.com/how-to-invest/investors-corner/profit-margins/\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"IE00BQXX3F31.USD","symbol_name":"GUINNESS GLOBAL INNOVATORS \"C\" (USD) ACC","start_time":0,"source_url":"https://www.investors.com/how-to-invest/investors-corner/profit-margins/","article_id":"2479197401","we_media_id":null,"thumbnails":["https://www.investors.com/wp-content/uploads/2017/05/stock-bull-bear-3-adobe-150x150.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2479197401","pubTimestamp":1730203204,"sourceInfo":{"source_id":"investor_business_daily_highlight","name":"Investor’s Business Daily"},"weMediaInfo":null,"summary":"A stock's profit margins should be accelerating as well. Like a stock's earnings per share, accelerating profits over the last three quarters can be indicative of a stock's potential strength.","collect":0,"end_time":0,"defaultTopTitle":"investors.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"IE00BQXX3F31.USD":"GUINNESS GLOBAL INNOVATORS \"C\" (USD) ACC","IE00BMPRXQ63.HKD":"NEUBERGER BERMAN NEXT GENERATION CONNECTIVITY FUND \"A\" (HKDHDG) ACC","LU0149725797.USD":"汇丰美国股市经济规模基金","LU0127658192.USD":"EASTSPRING INVESTMENTS GLOBAL TECHNOLOGY \"A\" (USD) ACC","LU0154236417.USD":"BGF US FLEXIBLE EQUITY \"A2\" ACC","LU0203345920.USD":"SCHRODER ISF QEP GLB ACT. 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But sales mean very little if they don't produce a profit.\nIf a company has a 25% profit margin, then it nets 25 cents per dollar of sales. Your child's must-have toy of the season retails for $25 and only costs $5 to manufacture. That's a profit margin of 80%.\n\n\n\n↑\nX\n\n\n\n\nMinervini: The Signs Behind Sentiment And How To Tell If A Rally Will Last\n\n\nSee All Videos\n\n\n\n\nNOW PLAYING\nMinervini: The Signs Behind Sentiment And How To Tell If A Rally Will Last\n\n\n\n\nThe higher the margin, the better. But you still don't have the entire picture until you compare a stock's pretax margin to others in the same industry.\nFor instance, Meta Platforms (META) was one of the biggest losers in 2022, despite a 40% margin. Occidental Petroleum (OXY) was among the biggest winners that year with pretax margin of 17%.\nThus, check a company's margins against its peers to get an apples-to-apples comparison.\nA stock's profit margins should be accelerating as well. Like a stock's earnings per share, accelerating profits over the last three quarters can be indicative of a stock's potential strength.\nYou can find this in IBD MarketSurge by going to the list section of the tool and selecting the list panel tools (on the wrench icon). Then select Customize Column Layout, which will bring up a series of options. Under Margins & Ratios, click AT Margin Accel. Drag the box into the Layout Preview and hit Apply.\nUse IBD's SMR Rating\nIBD's proprietary SMR Rating does the heavy lifting for you. This data item combines into one simple A-to-E rating system, four fundamental factors commonly used by analysts:\n\nSales growth rate over the last three quarters\nPretax profit margins\nAfter-tax profit margins\nReturn on equity (ROE)\n\nSales growth and after-tax margins are computed with quarterly figures, while return on equity and pretax margins are calculated using annual figures.\nFor the quickest way to find a stock's SMR Rating, use the IBD Stock Checkup. Enter your ticker and it will return with the stock's SmartSelect Ratings:\n\nEarnings per Share\nRelative Strength\nAccumulation/Distribution\nSales, Profit Margins, and Return on Equity\nIndustry Group Relative Strength\n\nEach rating includes its rank within the industry group and component data. All information is color coded for easy at-a-glance analysis.\nYour Day In The Sun\nIn April 2019, SolarEdge Technologies (SEDG) finished a cup base. Looking up its pretax margins, you would find 14% from the fourth-quarter 2018 earnings report.\nAround the same time, another leader in the solar energy group, First Solar (FLSR), had a pretax margin of -13%, meaning costs were higher than revenue.\nWhile First Solar was beginning to drift sideways, SolarEdge finished a short handle shakeout and gapped up, hitting a 20% gain immediately following the early-May earnings report.\nWith that much cushion, you could have very easily held until August, when the stock jumped again. By January 2021, SolarEdge had topped at a 774% gain from the April 2019 cup breakout. First Solar ran up 74% in the same time.\nThis article was originally published Feb. 17, 2023, and has been updated.\nYOU MAY ALSO LIKE:\nStock Market Forecast For 2023: Challenges Abound \nGet Free IBD Newsletters: Market Prep | Tech Report | How To Invest\nWhat Is CAN SLIM? If You Want To Find Winning Stocks, Better Know It \nIBD Live: Learn And Analyze Growth Stocks With The Pros","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"Business Data","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2479197401"}